How Technology change the way Financial
System works As a result, customer expectations have changed
Digital Banking - digital banking has been among
the front-leading applications of the financial
technology revolution. Consumers gradually
embracing the digital one due to its convenience
and efficiency. The FinTech trend in the exponential
adoption of digital banking solutions has also been
a result of the Covid-19 pandemic. The technology
has enabled people to do various banking activities,
such as making payments, taking loans, and
transferring funds.
Security Solutions - s more people begin to use
FinTech solutions, the safety of their funds,
personal data, and transactions becomes a matter
of prime concern. Several new technologies have
been invented to ensure that modern-day financial
services are secure. These include biometric data,
tokenization, and encryption.
Digital payment technologies - there are software
solutions in place that enable people to make
payments online using their smartphones. It has
helped further advance the globe toward a cashless
society.
1.) Banks Have Incorporated Digital Platforms into
Their Strategies
Digital platforms give consumers the ability to
conduct banking and financial transactions entirely
online. With the emergence of digital banking
platforms, consumers no longer need to visit a bank
or a financial institution’s physical location. Online
and mobile banking platforms have made life easier
by providing 24/7 access to banking, even on
weekends and holidays.
dramatically and not having an online platform has
become unacceptable. Gone are the days of waiting
in long lines at the bank, speeding to the bank to
beat closing time, or taking time off from work to
get to the bank. Simple transactions, personal and
small business loan applications, and even
mortgages can now be completed anywhere with
an internet connection. Customers can now seek
online payment options and save a great deal of
time.
To keep up with online banks such as Ally Financial
Inc., American Express, Discover Financial, &
Synchrony Financial, traditional banks and financial
institutions have had to make a change. Traditional
brick-and-mortar institutions have seen a steady
decline in foot traffic and so the need for physical
branches has also decreased. So, for the past
several years, many traditional banks have
integrated digital banking platforms into their
strategies to stay competitive and relevant.
The importance of digital banking platforms
became blatantly clear during the COVID-19
pandemic. According to a recent study, during the
shutdowns the use of contactless payments went
up by 30%, digital account registration went up by
over 70%, and the use of mobile banking apps went
up by over 80%. Covid-19 accelerated the demand
for digital platforms and, as a result, many financial
institutions suddenly needed to start closing their
branches.
Discover how commercial banks can meet
heightened customer expectation with digital
services; read our article!
2.) Banks Have Increased Spending on Technology
As the digital landscape has continually evolved,
banks and financial institutions have needed to
become more efficient. Many traditional brick-and-
mortar banks have been operating for decades and
were slow to move when new technology hit the
market. Bank operations were inherently inefficient
in their business operations, and technology
revealed just how outdated and wasteful the
banking and financial institutions were.
Banks needed to invest heavily in modern
technologies to keep pace with consumer demand.
They needed to provide faster services to their
customers while reducing overall costs. For the
banking industry, automation has been at the
forefront since the early 2000s, but the onslaught
of fintech and the recent pandemic has forced an
increase in technology spending.
The banking and financial sectors have faced a
brutal reality for the past few years. Either they
have needed to invest heavily in technology, or
experience decreasing profits and risk being forced
out of business entirely. In response, big banks such
as Wells Fargo, Bank of America, and JPMorgan
Chase, ramped up spending on technology to $8 to
$10 billion annually.
The median average for the entire banking industry,
including community banks, local banks, state
banks, and credit unions, is roughly $1.69 million
per year. Across the board, technology has been
placed at the forefront as banks and financial
institutions try to retain customers and to
innovative new customer experience.
3.) Banks Have Collaborated With FinTech
Companies
If you’re not quite sure what FinTech is, it broadly
refers to “financial technology”, but more
specifically, it designates a company whose sole
purpose is to automate and improve the use of
banking and financial services for customers,
business owners, and companies. Fintechs have
been around for decades but became extremely
popular after the global economic crash of 2008.
After the crash, people began looking for a reliable
way to obtain funds without using traditional
banks, and fintech started to gain momentum.
In 2009, Bitcoin came on the scene and let the
world know that they didn’t need big banks for
cryptocurrency and digital currency. In 2011,
Google introduced Google Wallet, and in 2014,
Apple introduced Apple Pay. The entry of two tech
giants sparked a boom in fintech, and the banking
industry took notice.
As a result, the banking industry feared that fintech
companies would be competitors that could cause
a substantial impact on the industry. However, as
the world became more open to fintech, the
banking and finance sectors realized that rather
than working against fintech companies they could
work with them.
The collaboration turned out to be a win-win for
the financial industries and for fintech. Banks dealt
with more regulation from the government when it
came to innovation, and fintech companies realized
the benefits of working with the banking industry’s
well-established customer base. By collaborating
with fintech, the banking and finance sectors have
utilized cutting-edge technology and, consequently,
have been able to provide better, more flexible
options to the customer.
4.) Banks Have Streamlined Services for Customers
The banking and financial sectors have taken
significant steps to make the customer experience
more convenience and easier use. People love
online banking and the power it provides to them.
They can check account balances, deposit checks,
pay bills, transfer funds, apply for credit or loans,
and download monthly statements at any time they
choose.
Digital platforms have become the norm and
continue to gain popularity for customers of all
ages. The processes that banking and finance
customers have grown accustomed to are now all
digitized, and consumers rarely need to contact
customer service. Streamlining banking and
financial operations has enabled companies to be
more agile in meeting the consumer’s needs while
reducing costs at the same time.
Banking and financial institutions are fully aware
that customers are the only reason they are in
business. To remain in business, they have
prioritized consumer needs to retain and increase
their customer base at every opportunity. Features
like contactless cards, paperless billing, 24/7
account access, overdraft protection, and mobile
check deposits have helped the banking and
financial sectors alleviate customer anxiety.
In addition, banking and financial companies
provide more content that teaches consumers how
to be financially literate and utilize the companies’
services for their benefit. With the influx of
millennial and Gen-Z customers into the
marketplace, banks and financial institutions have
recognized that, in a heartbeat, customers can take
their money elsewhere and so banks have changed
their strategies to keep their business and their
loyalty.
5.) Banks Have Embraced API’s
APIs (application program interfaces) allow
software applications to communicate with one
another. We use such software to send instant
messages, use Facebook, Twitter, Instagram, and
even check the weather. These applications
interpret user data and make it more readable. It’s
what allows you to do what you need to do when
you need to do it. A modern banking API connects
complex backend data sources with friendly user
interfaces, lets you ask questions and answers you
with relevant, updated answers to whatever you
ask.
As technology has evolved, the banking and
financial sectors have become more attuned to the
benefits of APIs. Banking and financial institutions
have incorporated biometrics, facial recognition,
and machine learning to secure the way customers
use their platforms. APIs allow banks and financial
institutions to gain a deeper understanding of how
users utilize their online platforms. Consumer
interaction provides valuable information that
helps companies meet the needs of their
customers.
Regulations, new competitors, new customers, and
the need for new revenue streams have caused
banks and financial institutions to seek new
possibilities for growth. By using new technologies
such as AI, cloud storage, and machine learning,
the banking and financial sectors can analyze the
information between the banking industries and
their customers.
There you have it! These are the five critical ways
that the banking and financial sectors have adapted
to the rapidly changing landscape of technology.
Are there more? Of course. The banking and
financial sectors will continue to use whatever
analytical capabilities are available to maintain
profitability, retain customers, and increase the
bottom line.